2020 candidate Andrew Yang: We need an alternative to GDP

Andrew Yang is seeking the presidential nomination of the Democratic Party in 2020. He may not be a household name, but he is running on a bold and headline-grabbing platform.

The central tenet of his campaign is the idea of universal basic income (UBI). All U.S. citizens between the ages of 18 and 64 would receive an unconditional $1,000 per month, which would cost the U.S. between $2 trillion and $3 trillion per year. Perhaps less known is his desire to find a new way to measure economic value. Currently, gross domestic product, or GDP, is the universal way to measure the market value of goods and services produced in a given economy.

‘Humanity-adjusted GDP’

Yang, 43, is the founder and former CEO of Venture for America, a nonprofit fellowship program that connects college graduates with two years of experience at start-ups or early-stage companies. Previously he served as CEO of Manhattan GMAT until its acquisition by Kaplan in 2009. Given his work as an entrepreneur and business leader, Yang said he’s anxious about automation and software, which are displacing workers.

In order to better assess the economy, Yang proposes a new measurement that takes factors like mental health, childhood success, engagement with work, levels of criminality and recidivism into account. Though he has yet to come up with a name, the working title is something along the lines of “American Scorecard.”

“GDP, as a baseline, would be difficult to adjust into something more holistic. There’s something called quality-adjusted life years. You can imagine something like humanity-adjusted GDP,” Yang said in an interview with Yahoo Finance.

How to measure happiness?

But the danger of this kind of measurement is that it can become more of a gimmick than a solution. South Asian nation Bhutan received splashy attention for proposing “Gross National Happiness” as an alternative way to measure its progress. Every five years, 8,000 randomly selected households participate in a survey that measures variables within nine domains: community vitality, culture, ecology, education, good governance, health, living standards and time use.

Despite this so-called attempt to prioritize citizens’ happiness, it appears that Bhutan being a happy nation is a misconception. In fact, it barely made it into the top 100 happiest countries, according to a 2017 United Nations report.

Yang acknowledged how difficult it is to measure subjective factors like psychological well-being.

“We could rely upon the depths of despair index, something that is very much rooted in hard data. Of course, happiness is tougher to measure, but things like suicide rates or drug abuse are more concrete concepts that people can understand,” he said.

‘Humanity First’

Yang’s platform is rooted in the idea that automation will ultimately displace most Americans. His campaign slogan is “Humanity First” and his new book is called “The War on Normal People: The truth about America’s disappearing jobs and why universal basic income is our future.”

“Seventy percent of Americans now agree that technology is going to eliminate more jobs than it creates over the next 10 years. And as a result, our campaign grows every day,” he said.

Tech executives like Tesla’s Elon Musk and Facebook’s Mark Zuckerberg have both emphasized the importance of humans in their increasingly algorithm- and robot-oriented business models. Still, Musk even admitted that “excessive automation at Tesla was [his] mistake. Humans are underrated.”

Yang said this seemingly “humanity first” approach doesn’t have a widespread impact.

“While Elon and Mark and others are going to hire thousands of people, we have to look at in context. We’re going to create thousands of jobs in certain places for certain people with skill sets on the coasts. But the majority of Americans aren’t going to be able to take advantage of those opportunities.”

How feasible is universal basic income?

Referencing shrinking opportunities in industries like administrative work, sales, retail and transportation, Yang said he believes UBI is vital to give Americans the foundation they need to survive in the future.

“UBI is vital so we can build a ground-up economy, based upon the businesses that people want to start in their towns,” he said.

Last fall, Y Combinator founder Sam Altman proposed what could be the largest research project in the U.S — but that would still involve only 1,000 people. Yang said his proposal is strikingly different from these relatively small-scale pilots. “The impact of $1,000 a month on families and individuals is so demonstrably positive. Children’s graduation rates go up and their personalities actually become more conscientious and agreeable. Mental health improves, domestic violence goes down,hospital visits go down,” he said.

“The problem with the Finland trials and a couple of the other trials aren’t true universal basic income in that they target people in a particular situation, like they’re out of work.”

While Yang is undeniably a long-shot candidate, he said he believes his candidacy will have a net positive effect on the political conversation.

“I’m very confident that this campaign will do an immense amount of good because Americans are waking up every day and realizing that they do need bigger and more genuine solutions.”

Melody Hahm is a senior writer at Yahoo Finance, covering entrepreneurship, technology and real estate.Follow her on Twitter @melodyhahm.